If you’re a Canadian who frequently travels to the U.S. or enjoys cross-border shopping, you might want to pay close attention to the latest currency forecast.

Last month, Deutsche Bank released a report suggesting that the Canadian dollar (CAD) could be headed for significant declines, potentially testing its all-time low. The driving force? An escalating trade war between Canada and the U.S.

Why The Loonie Could Drop Further

According to Deutsche Bank, if trade tensions continue to rise, the Bank of Canada may be forced to cut interest rates more aggressively than anticipated. Lower interest rates tend to weaken a country’s currency, meaning the loonie could see further downside pressure.

In this scenario, analysts predict the exchange rate could rise to at least 1.53 CAD per USD, with the potential to reach 1.61 CAD per USD—a level not seen since 2002.

Where Are We Now?

For context, the Canadian dollar is currently trading at 1.42 CAD per USD. If Deutsche Bank’s forecast proves accurate, this would mean an additional 7% to 13% decline in the loonie’s value.

What Does This Mean for Canadians?

A weaker dollar means higher costs for travel, shopping, and imports from the U.S. If you frequently visit the States or purchase goods priced in U.S. dollars, this could impact your wallet. On the other hand, a lower loonie can be beneficial for Canadian exporters, as it makes their goods more competitive in global markets.

What’s your take? Do you think the Canadian dollar will continue to slide, or will it stabilize?